Martin Lee @ Sg
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The Irony of CPF Approved Investments

Under the Central Provident Fund Investment Scheme (CPFIS), we can use the money in our CPF account to invest into certain instruments.

One of these includes shares listed on the Singapore Stock Exchange (SGX).

In considering the inclusion of shares under CPFIS, the CPF board uses the following criteria:

  1. The shares are offered by a company that is incorporated in Singapore;
  2. The shares are listed on the SGX MainBoard; (Previous SESDAQ companies transferred to Catalist will continue to be included under CPFIS while new companies listing on Catalist will not be included until further assessment by CPF Board.)
  3. The shares are traded in Singapore Dollars; and
  4. The company allows CPF investors, who have pre-registered with CPF Agent Banks, to attend their shareholders’ meetings (if any) as observers.

So many S-Chips, including the dodgy ones, would actually fall under this approved list. And we know what happened to many of them.

Ironically, investors will not be allowed to invest into top overseas blue chips like Microsoft, Google and Walmart.

CPF should either make their current criteria more stringent so that the more risky Singapore listed companies are not allowed onto the scheme, or allow big overseas companies onto the scheme. Or both.

Otherwise, the current arrangement just does not make complete sense.

There is of course another hurdle and inconsistency. Under the recently introduced regulation whereby retail investors have to pass certain requirements before they can investing in Specified Investment Products (SIPs), overseas listed stocks fall under the SIP.

Therefore, we are again faced with the irony that everyone can invest into dodgy S-Chip companies, but not overseas blue chips.

Leave a Comment:

mat says 12 years ago

..and on top of all that, only those aged 55 and above are allowed to Invest??
Can anyone clarify?

BRF Brasil Foods SA (NYSE ADR: BRFS)

Daniel P says 12 years ago

Personally I believe the new rules are meant to prevent investors from complaining, either you are competent or your broker/advisor is held responsible. If these rules had existed before the Lehman minibombs went off, MAS would be surely be immune to investor complaints.

Furthermore PAP has this reflex remedy for any problems, more tests. Even FDWs who cannot read English must pass a written test, surely the height of stupidity. There so many tests now.

In any case PAP has this donkey stance, they just ignore all feedback which does not fit their worldview. The donkey is never wrong.

ABC says 12 years ago

This is becoz govt has vested interest to support local stock market.

I was introduced to investing in overseas blue chips over 10 years ago by an uncle. Dollar-cost averaging into rock-steady blue chips with strong branding, international reach and solid balance sheets. I’ve never regretted it. Companies like Coke, Pepsi, Budweiser (now Anhauser), P&G, J&J, Altria, Philip Morris, Microsoft, Intel, McDonalds, Colgate-Palmolive, Eli Lilly, Pfizer etc. These companies may be boring, but damn they keep on increasing their dividends every year, even during 2008 and 2009. And to pump in those dividends back into these blue chips in order to maximise the returns.

Roger says 12 years ago

The people in charge are clueless when it comes to investments, but have the authority to shape our investments but not the responsibility for their losses. Dodgy Foreign companies make use of this fact to milk us dry with their unwitting blessings.

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